Nano To Pool In $1 mln. To Legal Fund Set Up For BitGrail Victims

Updated On Apr 10, 2018 by Cameron Bishop

Silver Miller, a US-based leading cryptocurrency law firm, has filed a class action lawsuit against Nano (formerly known as RaiBlocks (XRB), demanding the latter to perform a hard fork to “recover” the $170 million worth XRB tokens, which disappeared in the BitGrail incident. A few hours before, Nano Foundation has tweeted that it will contribute up to $1 million to the legal fund established by Enger, who leads the BitGrail victims pursuit to justice.

On February 10, news broke that 17 million XRB, or 10% of the total supply, had gone missing at BitGrail exchange, which was contributing the majority of traded volume at that time. The supposed hacking incident was first tweeted by Whalepool.

Lawsuit Against Nano

The lawsuit filed on behalf of Alex Brola, an American citizen, does not ask for direct financial restitution. Instead, it demands the Nano developers to perform a hard fork to undo the loss, similar to the fork that resulted in the creation of Ethereum and Ethereum Classic.

The lawsuit squarely blames the Nano team for the loss. It accuses that the team recklessly directed investors to open account with the severely distressed Italian exchange.

The lawsuit says,

“Simply stated, Defendants created the XRB currency, they directed XRB investors to place their assets at BitGrail; and when nearly all of the XRB purportedly safeguarded at BitGrail disappeared, Defendants disavowed any responsibility for the harm XRB investors suffered… Defendants suddenly sought to put more distance between themselves and BitGrail than even the Atlantic Ocean could provide.”

The lawsuit further demands a hard fork to recover the loss.

“Even though the most direct solution to the XRB investors’ problem resides squarely within Defendants’ hands, Defendants have refused to implement any such solution. Specifically, Defendants can rewrite the XRB code and simply restore ownership to the Plaintiff and the Class. In crypto terms, Defendants can create a “rescue fork” to protect Plaintiff and the Class’ property rights. Defendants, however, have refused to implement that strategy because it is not in their own best interests. The reason is simple: Defendants still own and control millions if not tens of millions of XRB and do not want to sacrifice any financial advantage they currently hold over the average XRB investor victimised by the XRB at BitGrail, which Defendants would do by “rescue forking” and returning the stolen digital assets.”

However, it should be noted that a court ordered fork would likely tank the value of the token further and would be of no use to the plaintiff. The suit also alleges that Nano has committed a violation of federal securities law by issuing unlicensed securities, although it is arguably an open-source software.

The lawsuit says Nano and its core team is

”engaged in an unregistered offering and sale of securities that violated federal securities laws, including Sections 5, 12(a), and 15 of the Securities Act of 1933, and wrongly ushered investors to BitGrail. The Lawsuit pleads that the Court rescind the plaintiff class’ investments in XRB and require Nano to “rescue fork” the allegedly missing XRB into a new cryptocurrency in a manner that would fairly compensate the class of victims”.

As anticipated, Nano distanced itself, saying that it has nothing to do with BitGrail incident. Nano has rejected a request to modify its ledger to cover the losses of investors. The Nano team said,

“BitGrail is an independent business and Nano is not responsible for the way Firano or BitGrail conduct their business. We have no visibility into the BitGrail organization, nor do we have control over how they operate. We now have sufficient reason to believe that Firano has been misleading the Nano Core Team and the community regarding the solvency of the BitGrail exchange for a significant period of time.”

Legal Fund to be setup for BitGrail victims

According to the Nano Foundation, the organization launched a detailed investigation soon after it came to know that BitGrail has become insolvent on February 8, 2018. While reaffirming that it has no control over the actions of third-parties, Nano team, in an effort to promote and empower good behavior, has decided to sponsor a legal fund that will “provide all victims with equal access to legal representation.”

Elaborating on the sequence of events leading to the announcement of this decision, the Nano Foundation stated that it got in touch with Espen Enger, a representative of nearly 60 BitGrail victims, on February 24. The number of victims has since then increased to 1,400. After a series of discussions, the Foundation became confident of Enger’s ability to manage the legal fund and BitGrail victims in their pursuit of justice in Italy. To take the matter forward, Nano Foundation met Enger and the Italian law firm Bonelli Erede.

Encourage by the progress made by Enger and Bonelli Erede, Nano Foundation has decided to match the contributions of the victims to the legal fund established by Enger — including both past and future donations, for up to $1 million — with a goal of establishing a total legal fund valued at $2 million.

So far, the victims represented by Mr. Enger have raised over $300,000 in multiple currencies (including over 53,000 Nano) on their own, which today will double to a value of over $600,000 with the donation from the Nano Foundation.

Nano Foundation has announced that it will match the donations until the amount pooled in the legal fund reaches $2 million. The Foundation has also requested victims to contact Enger at [email protected], providing name, country of residence and the amount of Nano in the BitGrail account. Enger will respond to the email, according to the agreement with the Foundation.

In addition to the BTC, ETH & LTC address provided for receiving donations, the Foundation has also provided a link to track the updates related to the legal action. The Nano Foundation has clarified that it deliberately kept a low profile to assist law enforcement agencies and victims’ attorneys.

The legal fund will be spent solely on the efforts of the victims to pursue their legal interests in connection with the BitGrail insolvency. According to the Foundation Enger will return any money that remains after the case is closed. Nano team hopes that the current plan offers victims the best chance to maximize their recovery.

Nano has once again stressed that a bug in BitGrail’s exchange software caused the loss of funds.

Cameron works tirelessly behind the scenes ensuring his many US news stories are factual, informative and brought to you in a timely fashion before most other media outlets have them. He is an investigative journalist at heart who also has a fond interest in the money and business markets too.

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